Bidding Process for PPP projects to be made more Stringent
Bidders for infrastructure projects are in for a surprise as the government is planning to take stringent measures in shortlisting them. Such a decision was taken following aggressive bidding for a number of high-profile projects, thereby resulting in exorbitantly high user charges.
Flaws in Bidding process to be ironed out:
A high-level committee has been entrusted by the government with the task of monitoring projects that have not been able to take off. The reason for the failure of such projects can be attributed to flaws in the bidding process due to aggressive, haphazard and unsustainable bidding. The decision by the government was taken following a Cabinet recommendation to revamp public private partnership (PPP) projects that attracted criticism due to their failure to take off. Besides, it was also noted that many new projects were also left in the lurch due to bidders shying away.
Inter-ministerial committee to look into conflict of interest cases:
It has also been noticed that many private consultants involved with PPP projects have conflicting interests. This could act as an impediment to the smooth functioning of such projects. To ensure that such practices are discouraged, an inter-ministerial committee has been formed under the Expenditure Secretary. According to a senior government official, it is important that such critical issues related to PPP projects be taken care of suitably. This is mainly because it takes longer for such wrongdoings to be detected in public-private projects compared to government contracts. By the time they are detected, the damage would already have been done, leaving a huge liability on the exchequer.
Finance ministry encourages using model bidding documents:
To ensure that the bidder selection is done in a transparent, fair and competitive manner, the finance ministry has encouraged the use of model bidding documents. However, it has been noted that aggressive bidding has been rampant, especially for projects in the road sector. There have been instances were bidders have withdrawn from many mega projects, thereby leaving the fate of such projects in the balance. An instance of this can be cited in the case of infrastructure giants GVK and GMR, who abandoned two mega highway projects worth over 10,000 crore due to delays caused by red tapism.
Panel to filter bidders:
In this context, the government is contemplating the action that should be taken against developers who defer the premiums that they have committed to pay the government to win the contracts. The prime reason for such a state of affairs is because many bidders with disputable credentials could have entered the fray due to the pre-qualification criteria being relaxed. It is expected that the Cabinet secretariat would form a panel so as to suggest norms for filtering bidders, based on global standards.
Clearly defined role of consultants to help:
Conflict of interest on the part of consulting firms involved in PPP projects has been the bane of such projects. Considering that such firms get a huge chunk of their business from corporate clients, there are instances where they meander to private operators, after providing advice to the government on PPP projects. Commenting on this state of affairs, a core ministry official stated that the role of consultants should be limited and clearly defined. On the other hand, the public authority should be in charge of issues related to policy, regulations and commercial interests.
